Agility, Talent and Technology - City Momentum Index 2018 JLL Global Research - JLL Singapore

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Agility, Talent and Technology - City Momentum Index 2018 JLL Global Research - JLL Singapore
City Momentum Index 2018

Agility, Talent and Technology
JLL Global Research
Agility, Talent and Technology - City Momentum Index 2018 JLL Global Research - JLL Singapore
2                                                                               JLL City Momentum Index 2018 Edition

Agility, Talent and Technology
The pace and scale of change in today’s globalised, digitised economy is leading to an unprecedented
transformation of our cities. As technology-enabled platforms lower barriers to entry and ensure that
demand for talent and innovation becomes increasingly global, cities are needing to adapt and build
environments that foster innovation ecosystems, talent and connectivity in order to maintain their
competitiveness and gain the benefits of this rapid shift.

JLL’s City Momentum Index (CMI), now in its fifth year, tracks a broad range of factors to identify those
cities which possess the attributes for success over the short and long term. The Index covers 131 major
established and emerging business hubs across the globe, measuring each city’s short-term socio-economic
and commercial real estate momentum, together with its ‘future-proofing’ capacity – the ability to maintain
this momentum over the longer term.

The 2018 CMI focuses for the first time on those cities which have the qualities necessary to manage and
benefit from this rapid technological shift in the global economy and assesses their future-proofing potential
– potential founded in factors such as innovation capability, talent and world-class higher education; high
levels of technology start-ups and scale-ups; patent applications; public infrastructure; and the quality of the
environment. While some of the world’s largest and most globally-connected cities feature in this list – like
New York, London, Paris and Tokyo – smaller metro areas able to leverage their strengths in education,
liveability and sustainability such as Silicon Valley, Melbourne and Stockholm also perform strongly.

The need to take into account a city’s future-proofing capabilities is increasingly recognised by real estate
investors, developers and corporations. For investors, there is an imperative to comprehend which cities will
be able to gain from technological transformation for long-term value preservation and growth. Developers
can contribute to city success by understanding city strategies and their capacity for supporting the move
towards new types of economy activity, enabling them to produce transformational projects that facilitate
creativity, innovation and the sustainable communities that businesses and workers are now demanding.
And with access to talent a key consideration for corporate location strategies, businesses need to know
which cities have the attributes necessary to attract and retain skilled workforces.

The 2018 edition of the CMI also identifies the cities exhibiting the greatest short-term economic and real
estate momentum (over a three-year horizon). These cities are undergoing significant change to their urban
fabric as they build out the infrastructure to meet urgent demand, and many are quickly moving up the value
curve, dominated by cities in the Asia Pacific region.

Combining the different components of the CMI together also allows us to highlight cities which are seeing
strong short-term momentum while also possessing the features necessary for long-term success, such as
Singapore and Seattle.
Agility, Talent and Technology - City Momentum Index 2018 JLL Global Research - JLL Singapore
3                                                                            JLL City Momentum Index 2018 Edition

City Momentum Index:

Future-Proofing

                                   Global Top 30

      1    San Francisco                 11    Chicago                  21     Washington DC

      2    Silicon Valley                12    Seattle                  22     Copenhagen
      3    New York                      13    Tokyo                    23     Stockholm
      4    London                        14    Sydney                   24     Edinburgh
      5    Boston                        15    Munich                   25     Philadelphia
      6    Los Angeles                   16    Berlin                   26     Montreal
      7    Paris                         17    Melbourne                27     Helsinki
      8    Amsterdam                     18    Austin                   28     Seoul
      9    Toronto                       19    Vancouver                29     Singapore
     10    San Diego                     20    Denver                   30     Zurich

          Americas          EMEA         Asia Pacific

    Future-Proofing: Key Ingredients

           Technology Firms                Education                    Environment

           Transparency                    Infrastructure               International Patents

    The cities which top the CMI 2018 Future-Proofing rankings are at the forefront of the
    innovation economy. By investing in and leveraging their strengths in technology,
    physical and digital connectivity, quality of life and sustainability, they are positioned
    to maintain their performance into the future in this new competitive landscape.

    Source: JLL, 2018
Agility, Talent and Technology - City Momentum Index 2018 JLL Global Research - JLL Singapore
4                                                                                 JLL City Momentum Index 2018 Edition

Technology clusters underpin sustained
momentum in North America

Home to some of the world’s most dynamic technology ecosystems, North America accounts for half of the
cities in the Future-Proofing Global Top 30:

•       The San Francisco Bay Area’s San Francisco (1st) and Silicon Valley (2nd) top the Future-Proofing
        component as the world’s premier technology hubs. Between them, these two cities are home to more
        than a third of all tech ‘unicorns’ created over the last 15 years globally, while they also host the largest
        number of new tech start-ups.

•       New York (3rd) has the most people employed in tech occupations in the U.S., as well as adding the
        largest amount of people in this category over the five years to 2016. Supplementing its concentration of
        the world’s biggest companies, it has the second highest number of tech start-ups in the CMI (after San
        Francisco).

•       A unique concentration of some of the world’s leading research institutions and human capital ensures
        Boston’s (5th) status as a global leader in research and technology. Heading the rankings for education
        infrastructure and impact, the city is among the most prolific sources of patent applications globally.

•       Southern California’s Los Angeles (6th) and San Diego (10th) are also both in the top 10 markets. World-
        class university systems are underpinning substantial growth in technology talent, with their combined
        metros employing more people in computer and mathematical occupations than any other West Coast
        market. This is translating into significant innovation potential, with both cities also among the top 5
        U.S. markets for international patent applications.

•       Toronto (9th) is home to a thriving technology sector and is a global leader in commercialising new
        technology. Projects such as Quayside – a waterfront neighbourhood which is being designed as a
        new form of tech-enabled community in partnership with Sidewalk Labs, an Alphabet subsidiary –
        underscore the city government’s commitment to leading on new forms of city innovation.

Together with these major tech clusters, a number of smaller tech and knowledge-intensive cities such
as Austin (18th), Vancouver (19th) and Denver (20th) also feature in the Global Top 30, drawing on strong
education systems, connectivity and liveability platforms to attract companies and talent.
5                                                                                 JLL City Momentum Index 2018 Edition

Northern Europe outperforms
Northern European cities are strongly represented among the Future-Proofing Global Top 30, boosted
by high levels of knowledge-intensive employment, physical and digital infrastructure, and sustainability
credentials. Three metro areas stand out in the top 10 of the rankings:

•       London’s (4th) strengths in education and innovation support vibrant and diversified technology and
        creative sectors, as it registers the largest number of tech start-ups as well as tech ‘unicorns’ in Europe.
        It has ranked as the top destination for foreign companies to invest in software and IT services globally
        over the last 10 years, and 2017 marked the seventh successive year with over US$1 billion of foreign
        investment in the sector.

•       Paris (7th) is Europe’s research engine, with the biggest high-tech workforce in the region and accounting
        for the greatest number of international patent applications. Significant investment – such as the ‘Grand
        Paris’ project, one of the largest infrastructure programmes in the world – is laying the groundwork for
        sustained momentum in the future.

•       Amsterdam (8th) has one of Europe’s fastest-expanding technology scenes, with the highest levels of tech
        start-ups per capita in the region, underpinned by its global connectivity and multilingual and highly
        educated workforce. Successful local firms like Booking.com, TomTom and Gemalto are now being
        joined by a new set of tech start-ups, such as WeTransfer and Adyen, while the city is also the regional
        base for several global tech companies.

A number of other European cities also perform particularly well, supported by exceptional levels of high-
tech employment, concentrations of innovative, globally successful firms and a high quality of life, including
the Nordic capitals Copenhagen (22nd), Stockholm (23rd) and Helsinki (27th), the German cities of Munich
(15th) and Berlin (16th), and Edinburgh (24th) in the UK.
6                                                                         JLL City Momentum Index 2018 Edition

      Mapping the City Momentum Index:

      Future-Proofing Global Top 30
                                Toronto                        Copenhagen
                                Montreal                       Helsinki
                                New York      Edinburgh        Stockholm
                                Washington DC   London
     Vancouver                                                                                     Seoul
                                Boston
        Seattle                                                                                    Tokyo
                                Chicago
                                Philadelphia

                 1    San Francisco             11   Chicago                21   Washington DC

                 2    Silicon Valley            12   Seattle                22   Copenhagen
                 3    New York                  13   Tokyo                  23   Stockholm
                 4    London                    14   Sydney                 24   Edinburgh
                 5    Boston                    15   Munich                 25   Philadelphia
San Francisco
 Silicon Valley 6     Los Angeles               16  Berlin                  26   Montreal
                                                                                   Singapore
                                                     Paris
  Los Angeles
                7     Paris                     17 Melbourne
                                               Amsterdam                    27   Helsinki
     San Diego
                                                    Berlin
                 8    Amsterdam
                       Denver                   18 Austin                   28   Seoul
                                                   Munich
                 9     Austin
                      Toronto                   19 Zurich
                                                    Vancouver               29   Singapore
                10    San Diego                 20   Denver                 30   Zurich             Sydney
                                                                                                 Melbourne

                     Americas          EMEA     Asia Pacific

               Future-Proofing:Key
              Future-Proofing:  KeyIngredients
                                    Ingredients

                      Technology Firms            Education                 Environment

                      Transparency                Infrastructure            International Patents

      Source: JLL, 2018
7                                                                              JLL City Momentum Index 2018 Edition

‘Established World Cities’ maintain
their lead in Asia Pacific

Several of Asia Pacific’s most globally connected, high-value and transparent cities have made considerable
progress towards building the innovation ecosystems and human capital required to continue to thrive in
the new digital economy:

•       North Asia’s largest urban economies Tokyo (13th) and Seoul (28th) both feature in the Global Top 30.
        Concentrations of innovative global firms and among the world’s best digital connectivity are helping
        them maintain their positions as global research leaders, particularly in hardware and robotics, as
        they take the top two positions for international patent applications. Both cities are also investing in
        significant infrastructure projects – such as Seoul’s Pangyo Techno Valley and the development of new
        autonomous public transit systems in Tokyo, expected to be ready for the 2020 Summer Olympics.

•       Australia’s Tier 1 cities Sydney (14th) and Melbourne (17th) both figure in the Global Top 30, supported by
        robust technology sectors and strengths in education and liveability.

•       Singapore (29th) has supplemented its established strengths in high-tech hardware manufacturing with a
        growing focus on software innovation, supported by high levels of R&D spending and a robust education
        system. The regional headquarters for several of the world’s largest technology companies, it is also
        home to R&D centres for Google, HCL and Infosys as well as to one of the largest tech start-up scenes in
        Asia. Government commitment to fostering new technology – like piloting NuTonomy, the world’s first
        autonomous taxi service – is also positioning it robustly for the future.
8                                                             JLL City Momentum Index 2018 Edition

City Momentum Index:

Short-Term Momentum Top 30

       Top 10                  11-20            21-30
                                                                Short-Term Momentum:
 1     Hyderabad          11   Nairobi     21   Chengdu            Key Ingredients
 2     Bangalore          12   Chongqing   22   Beijing

                          13   Wuhan       23   Jakarta
                                                                     Population
 3     Ho Chi Minh City
                          14   Chennai     24   Kuala Lumpur
                                                                     Connectivity
 4     Pune
                          15   Shanghai    25   Lagos
                                                                     RE Investment
 5     Kolkata
                          16   Guangzhou   26   Singapore
                                                                     Property Prices
 6     Hanoi
                          17   Tianjin     27   Dubai
                                                                     Economic Output
 7     Nanjing
                          18   Manila      28   Bangkok
                                                                     Corporate Activity
 8     Delhi
                          19   Shenzhen    29   Seattle
                                                                     Construction
 9     Hangzhou
                          20   Mumbai      30   Bucharest
                                                                     Retail Sales
 10    Xian

Source: JLL, 2018
9                                                                             JLL City Momentum Index 2018 Edition

Asia Pacific cities in the ascendancy

The CMI Short-Term Momentum rankings identify the urban economies and real estate markets which are
currently undergoing the most rapid growth. They highlight the continued rise of Asia Pacific’s cities as
destinations for global capital, commerce and innovation, with markets from the region accounting for 25 of
the Global Top 30:

•       India maintains its pre-eminence in the Short-Term Momentum rankings with four of the top five markets,
        as its cities register among the highest rates of demographic and economic growth globally, while also
        benefitting from government efforts to boost business attractiveness and invest in infrastructure. The
        country’s leading tech hubs Hyderabad (1st) and Bangalore (2nd) take the two top positions, while Pune
        (4th) and Kolkata (5th) round out the top 5. India’s Tier 1 cities Delhi (8th), Chennai (14th) and Mumbai
        (20th) also feature in the Global Top 30, with continued strong demand from technology, finance and
        pharmaceutical companies keeping take-up volumes buoyant and investor activity on an upward path.

        While economic energy is propelling India’s cities forward, they also exemplify some of the challenges
        facing markets with strong momentum, including strains on infrastructure and local amenities;
        high levels of inequality and affordability issues; and environmental degradation, which can all be
        compounded by a lack of planning oversight and transparency. In order to maintain their growth over
        the longer term, these cities will need to focus on future-proofing their markets through improved
        liveability and affordability, regulatory transparency and physical and technological infrastructure.

•       Chinese cities show no sign of diminishing momentum, accounting for 11 of the Global Top 30. China’s
        ‘Powerhouses’, which are firmly integrated into global production networks and engines of the national
        economy – Nanjing (7th) and Hangzhou (9th) – are the top performers, boosted by their shift up the
        value chain. They are joined by markets with a strong talent base which are becoming global leaders
        in technology and advanced manufacturing such as Guangzhou (16th) and Shenzhen (19th), while
        China’s ‘Established World Cities’ Shanghai (15th) and Beijing (22nd) remain among the world’s most
        dynamic markets, supported by a raft of innovative, ‘next generation’ corporations, rapidly-developing
        infrastructure and educated workforces.

•       The Vietnamese cities of Ho Chi Minh City (3rd) and Hanoi (6th) are attracting sizeable volumes of foreign
        direct investment (FDI) as they integrate into regional and global supply chains for high-technology
        manufacturing. This is helping to spur rapid economic and income growth, leading to among the world’s
        highest rates of increase in retail sales and air passenger numbers.

•       Asian ‘Megahubs’ which act as regional gateways and have the scale to compete for talent, visitors
        and innovation – including Manila (18th), Jakarta (23rd), Kuala Lumpur (24th) and Bangkok (28th) – are
        continuing to drive forward on the back of significant economic momentum. Offering substantial growth
        potential, these cities are key expansion markets for many corporates and are drawing particular interest
        from Chinese companies as they internationalise. They also have some of the highest levels of real
        estate completions across the globe as they build out the infrastructure to service this demand.
10                                                                                JLL City Momentum Index 2018 Edition

Short-Term Momentum versus Future-Proofing

Singapore and Seattle in the sweet spot

The two components of the City Momentum Index enable cities to be grouped according to their short-
term economic and real estate dynamism, as well as the extent to which they have built the future-proofing
capacity necessary for longer-term success. This highlights two cities in particular which are combining
strong short-term momentum and robust future-proofing potential, scoring in the Global Top 30 on both
measures:

•        Singapore has registered the greatest improvement in Short-Term Momentum of any market over
         the past year. Rising global trade levels have boosted economic momentum and contributed to an
         improvement in corporate demand, with net office absorption in 2017 doubling from the previous year.
         Singapore is projected to record the largest rental growth of any major office market globally in 2018.

•        Significant demand from growing tech companies is continuing to boost economic momentum and
         real estate take-up in Seattle. Supported by growth in its share of U.S. tech market jobs, more than 60%
         of the office space currently being sought by tenants is required by technology companies, boding well
         for continued strong performance of the Seattle office sector. Tech tenants’ ongoing need for additional
         space has placed a premium on centrally-located, creative offices with high-end amenities and transit
         accessibility and is contributing to among the highest rates of forecast office rental growth globally over
         the next three years.

           Short-Term Momentum v Future-Proofing

              Cities with strong                                                               Cities with strong
               future-proofing                                                                     short-term
                   attributes                                            Singapore
                                                                                               momentum and
                                                                           Seattle              future-proofing
                                                                                                    attributes
                              Future-Proofing

                                                Short-Term Momentum     Cities with strong
                                                                      short-term momentum

         Source: JLL, 2018
11                                                             JLL City Momentum Index 2018 Edition

City Momentum Index:

Technical Note

     The 2018 edition of the City Momentum Index focuses
     for the first time on two separate elements of city
     dynamism: short-term market momentum and
     ‘future-proofing’ for longer-term success. New
     indicators in the CMI 2018 include the number of
     technology ‘unicorns’ created in each city and the
     quality of public transport infrastructure.

     The City Momentum Index presents a weighted overall
     score for the sub-scores of 46 variables. For each
     variable the model calculates a score based on the
     city’s performance relative to the distribution of all
     131 city regions, scaled from zero to one. Thus the
     top-scoring city for each variable has a value of one,
     while the lowest-scoring city receives a value of zero.
     The variables used in the model are summarised in
     the chart on the following page, combining variables
     of short-term socio-economic and commercial real
     estate momentum with variables measuring longer-
     term potential – its future-proofing credentials.
12                                                                             JLL City Momentum Index 2018 Edition

Short-Term Momentum

• Socio-economic momentum (accounting for 50% of the model) includes variables relating to the
  recent percentage changes in city GDP, population, air passengers and corporate headquarters presence;
  projected percentage changes in GDP, population and retail sales; and recent levels of and changes in
  foreign direct investment (as a proportion of a city’s economy).

• Commercial real estate momentum (accounting for 50% of the model) includes variables relating
  to recent and projected percentage changes in office net absorption, office construction, office rents,
  shopping mall construction, retail rents and hotel rooms. This sub-index also includes international
  retailer presence, home-sharing listings, and recent changes in direct commercial real estate investment
  volumes and real estate transparency.

Future-Proofing

Future economic strength and real estate momentum over the longer term are likely to be partially
determined by the quality of a city’s education infrastructure, its innovation capability, environmental
sustainability and the strength of its technology sector. This index includes a weighted score of the presence
of the world’s top universities, international patent applications, air quality, public transport infrastructure,
third-party indices of the innovation economy, and the presence of technology firms.

Data sources: All real estate data for the City Momentum Index is sourced to JLL. The non-real estate data
is drawn from a wide range of sources that includes Oxford Economics, United Nations, ACI, OECD, WHO,
GaWC, fDi Markets, QS, 2thinknow, Atomico and AngelList. The Index also sources data from many national
statistical offices.

Data comparability and accuracy: The CMI model is based upon data which we believe to be reliable.
While every effort has been made to ensure the accuracy and completeness of the data used, we cannot
offer any warranty that factual errors may not occur. For the vast majority of cities and variables, data
relating to the city region has been used, but in a few cases, particularly in emerging markets, we have had
to rely on national data.

How is the City Momentum Index constructed?
46 variables are combined to assess short-term momentum and longer-term future-proofing attributes.

                                               City Momentum Index

                    Short-Term Momentum                                             Future-Proofing

            Socio-Economic                 Commercial Real                   Higher Education Infrastructure
            Momentum                       Estate Momentum                        Innovation Capability
                                                                            International Patent Applications
                                                                                    Technology Firms
      Economic Output              Construction, Absorption, Price                    Infrastructure
         Retail Sales                  Offices, Retail, Hotels                    Environmental Quality
          Population                 Investment Transactions
       Air Connectivity                    Transparency
       Corporate HQs
  Foreign Direct Investment

Source: JLL, 2018
13                                                                           JLL City Momentum Index 2018 Edition

City Coverage

The 131 cities covered by the City Momentum Index have been shortlisted on the basis of a combination of
a weighted index of population, GDP, corporate presence, air connectivity, real estate investment activity
and commercial real estate stock. Each city is defined as its metropolitan region as delineated by national
statistical offices or by international organisations (e.g., United Nations).

North America                                                                    Asia Pacific
Atlanta                                                                                Adelaide
Austin
Baltimore            34                                                                Auckland
                                                                                       Bangalore         38
Boston                                                                                 Bangkok
Calgary
Charlotte                                   EMEA 51                                    Beijing
                                                                                       Brisbane
Chicago                                                                                Chengdu
Columbus                                    Abu Dhabi          Jeddah                  Chennai
Dallas                                      Amsterdam          Johannesburg            Chongqing
Denver                                      Antwerp            Kiev                    Delhi
Detroit                                     Athens             Lagos                   Fukuoka
Houston                                     Barcelona          Lisbon                  Guangzhou
Kansas City
Las Vegas                   8               Berlin
                                            Birmingham
                                                               London
                                                               Lyon
                                                                                       Hangzhou
                                                                                       Hanoi
Los Angeles                                 Brussels           Madrid                  Ho Chi Minh City
Miami
Minneapolis           Latin                 Bucharest
                                            Budapest
                                                               Manchester
                                                               Milan
                                                                                       Hong Kong
                                                                                       Hyderabad
Montreal                                    Cairo              Moscow                  Jakarta
New York
Orlando
                     America                Cape Town
                                            Casablanca
                                                               Munich
                                                               Nairobi
                                                                                       Kolkata
                                                                                       Kuala Lumpur
Philadelphia                                Cologne            Oslo                    Manila
Phoenix                   Bogota            Copenhagen         Paris                   Melbourne
Pittsburgh                Buenos Aires      Doha               Prague                  Mumbai
Portland, Oregon          Lima              Dubai              Riyadh                  Nagoya
St Louis                  Mexico City       Dublin             Rome                    Nanjing
Salt Lake City            Monterrey         Dusseldorf         St Petersburg           Osaka
San Diego                 Rio de Janeiro    Edinburgh          Stockholm               Perth
San Francisco             Santiago          Frankfurt          Stuttgart               Pune
Seattle                   Sao Paulo         Geneva             Tel Aviv                Seoul
Silicon Valley                              Glasgow            Vienna                  Shanghai
Tampa                                       Hamburg            Warsaw                  Shenzhen
Toronto                                     Helsinki           Zurich                  Singapore
Vancouver                                   Istanbul                                   Sydney
Washington DC                                                                          Taipei
                                                                                       Tianjin
                                                                                       Tokyo
                                                                                       Wuhan
                                                                                       Xian

 Source: JLL, 2018
Contacts
JLL Regional Headquarters

Chicago                                                  London                                             Singapore
200 East Randolph Drive                                  30 Warwick Street                                  9 Raffles Place
Chicago IL 60601                                         London W1B 5NH                                     #39-00 Republic Plaza
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Authors                                                  Contributors

Rosemary Feenan                                          Lauro Ferroni
rosemary.feenan@eu.jll.com                               lauro.ferroni@am.jll.com

Jeremy Kelly                                             Lee Fong
jeremy.kelly@eu.jll.com                                  lee.fong@ap.jll.com

Matthew McAuley                                          Josh Gelormini
matthew.mcauley@eu.jll.com                               josh.gelormini@am.jll.com

                                                         Shetal Patel
                                                         shetal.patel@eu.jll.com

                                                         Craig Plumb
                                                         craig.plumb@eu.jll.com

To learn more about cities and real estate, visit our website
www.jll.com/cities-research

COPYRIGHT © JONES LANG LASALLE IP, INC. 2018.
This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics discussed, which are inherently
unpredictable. It has been based on sources we believe to be reliable, but we have not independently verified those sources and we do not guarantee that the information
in the report is accurate or complete. Any views expressed in the report reflect our judgment at this date and are subject to change without notice. Statements that are
forward-looking involve known and unknown risks and uncertainties that may cause future realities to be materially different from those implied by such forward-looking
statements. Advice we give to clients in particular situations may differ from the views expressed in this report. No investment or other business decisions should be made
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